Elevator Pitch: Julie Meyer of Ariadne Capital on how to crush it in Europe

Palo Alto native Julie Meyer headed off to Paris after finishing college in the late 1980s, intent on learning the language. She got a job teaching English to French executives who worked for Silicon Valley stalwarts like Hewlett Packard and 3Com. Today, Meyer is one of the most influential venture capitalists in Europe.

Her Ariadne Capital — named for the mythical princess who helped a hero navigate the labyrinth — was one of the first to back Skype. Meyer also is co-host of a popular Shark Tank-style program called Dragon’s Den, which appears on the BBC’s website. During a recent visit home to the Bay Area, she spoke with Elevator Pitch about the differences between the valley and Europe’s burgeoning tech scene.

Q: HOW’D YOU GET INTO THIS RACKET?

A: I spent 1990-2000 building First Tuesday, a pan-European network for entrepreneurs that eventually sold for $50 million. I would hear from every corner that European venture capital, as an asset class, doesn’t work. I got sick of hearing that old refrain and decided to do something about it.

Europe has excellent entrepreneurs, but they are let down by the poor quality of financing. The Sand Hill Road of Europe is most definitely not built yet.

Q: WHAT DO YOU LIKE ABOUT VC?

A: Redesigning it. We pioneered the entrepreneurs-backing-entrepreneurs model in Europe; our founding shareholders include the founders of companies like Hotmail, BetFair and WorldPay. We’ve continued to build a crowd of entrepreneurs who co-invest with us, from board directors of Amazon to the CEO of multi-billion pound semiconductor firms.

We operate on a radically different premise than other venture capital funds: That the entrepreneur is our client. It’s about him or her, not us. Entrepreneurs seek us out because we’ve been in the burning building of a startup ourselves. And unlike many venture capitalists in Europe, we have our own money at stake.

Q: WHAT KINDS OF PITCHES ARE YOU LOOKING FOR NOW?

A: We are focusing on fintech right now, as an entirely new system is emerging out of the financial crisis. There are opportunities in infrastructure for bitcoin or other digital currencies, as well as many types of payments, digital identity, crowdfunding platforms and applications that banks will either adopt or buy.

Q: WHAT’S THE BIGGEST MISTAKE ENTREPRENEURS MAKE?

A: There are many I’ve seen in the 15 years I’ve been doing this. These are some that can be deadly:

· Making all your friends co-founders with founding equity, when only two of you are doing the work. Once you’ve given the founding equity away, you can’t get it back.

· Not reading the investment documents thoroughly. I once had to break the bad news to a (not stupid) guy who hadn’t realized when he signed with his Series A investors that if he missed some milestones, a massive amount of his firm was going to be transferred to the venture capitalists.

· Outsourcing the development of the product to an agency of some sort. If the product is not built in-house, don’t invest.

· In Europe in particular, marketing is not as strong as in the US for tech start-ups. There’s much more of a feeling that the technology is going to carry the day, but marketing trumps tech again and again.

· Not making rational decisions about when to sell. I’ve seen a lot of entrepreneurs still hankering for the big number that they should have sold for years earlier.

Q: WHAT’S THE NEXT BIG THING GOING TO BE?

A: Vertically integrated hardware and software combinations. Nest, the so-called thermostat company, is one. They had to deal with the guts of houses and pipes as well as customer design issues and user behavior.

Once upon a time the world was PC-centric, and the Windows-Intel alliance ruled the platform. Fast forward to the Consumer Electronics Show in January, and I saw platforms everywhere — the car, the home, the person. Elsewhere, the ship, the airplane, the train are all becoming platforms as well. To catch up, these industries are looking for entrepreneurs who are taking a system-level approach to the total customer experience.

Infrastructure is a tough place to be; whether telephone companies, hospitals, schools or airlines, they get regulated, must pay tax. That’s why the technology platform companies are winning — the iPhone is in ascendancy, not Vodafone or Telefonica.

Volkswagen or General Motors could have created Tesla, but they didn’t. They didn’t reimagine their industries as ecosystems, so an entrepreneur did. Goliath rests on his laurels, doesn’t anticipate change, and that gives the David the opportunity.

Q: HOW WOULD YOU DESCRIBE THE STARTUP CULTURE IN EUROPE VS. THE VALLEY’S?

A: Europe is being redefined by its entrepreneurs right now. There are just as many subversive, crazy, want-to-change-the-world entrepreneurs there; the difference is that many of the buyers of tech firms are in the U.S., and NASDAQ is still considered the dominant place to go public.

Different parts of Europe are good at different things. Finland is excellent at gaming. The French have extremely strong engineering talent. Holland has a lot of logistics expertise, and the UK is outstanding in fintech and biotech.

Q: WHAT ARE THE CHALLENGES VALLEY TECH COMPANIES FACE MAKING INROADS IN EUROPE?

A: Valley firms frequently don’t get the complexity of Europe. Americans try to homogenize things; I know, I’m an American. Having a European run Europe, as opposed to sending an American over, can help.

Personally, I’ve struggled with the work ethic. There is without question a different balance on the work/life continuum over here. I find that I run circles around a lot of people merely because I put in the hours that a typical Silicon Valley exec would.

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